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Inequality of outcomes vs. inequality of opportunities in a developing country. An exploratory analysis for Chile

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  • Javier Núñez
  • Andrea Tartakowsky

Abstract

We apply a variation of Bourguignon, Meléndez and Ferreira (2005) methodology to examine the extent to which income inequality is associated with the inequality of observed exogenous circumstances of origin that determine individuals’ “opportunities” to pursue their chosen life plans. We find that equalizing a set of observed circumstances of origin across individuals such as parents’ schooling, parents’s stability of employment, father’s age, household size and growing in a single vs a bi-parental household reduces income inequality, but in a small margin, in the range of 8 to 13 points of the Gini coefficient, about a 15-20 per cent drop. These results are similar to those obtained by Bourguignon et al. (2005) for Brazil, although the dataset and the set of observed circumstances are partially different. These results suggest that a significant part of income inequality may be associated with unobserved heterogeneity across individuals unrelated to circumstances of origin, such as preferences, eff

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Bibliographic Info

Article provided by University of Chile, Department of Economics in its journal Estudios de Economia.

Volume (Year): 34 (2007)
Issue (Month): 2 Year 2007 (December)
Pages: 185-202

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Handle: RePEc:udc:esteco:v:34:y:2007:i:2:p:185-202

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Web page: http://www.econ.uchile.cl/
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Related research

Keywords: Income inequality; equality of opportunities.;

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References

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  1. Di Tella, Rafael & Alesina, Alberto & MacCulloch, Robert, 2004. "Inequality and Happiness: Are Europeans and Americans Different?," Scholarly Articles 4553007, Harvard University Department of Economics.
  2. Jaime Ruiz-Tagle, 2007. "Forecasting wage inequality," Estudios de Economia, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 141-162, December.
  3. Jere R. Behrman & Mark R. Rosenzweig, 2004. "Returns to Birthweight," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 586-601, May.
  4. François Bourguignon & Francisco H. G. Ferreira & Marta Menéndez, 2007. "Inequality Of Opportunity In Brazil," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 585-618, December.
  5. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
  6. Javier Núnez & Roberto Gutiérrez, 2004. "Class discrimination and meritocracy in the labor market: evidence from Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 31(2 Year 20), pages 113-132, December.
  7. Jere R. Behrman, 2011. "How much might human capital policies affect earnings inequalities and poverty?," Estudios de Economia, University of Chile, Department of Economics, vol. 38(1 Year 20), pages 8-41, June.
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Citations

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Cited by:
  1. Zhang, Yingqiang & Eriksson, Tor, 2009. "Inequality of Opportunity and Income Inequality in Nine Chinese Provinces, 1989-2006," Working Papers 09-18, University of Aarhus, Aarhus School of Business, Department of Economics.
  2. Margarita Velín & Paúl Medina, 2011. "Estudio de la desigualdad de ingresos en el Ecuador considerando esfuerzos y herencias sociales," Analítika, Analítika - Revista de Análisis Estadístico/Journal of Statistical Analysis, vol. 1(1), pages 59-90, Junio.
  3. Javier Núñez Errázuriz & Andrea Tartakowsky, 2009. "The relationship between Inequality of Outcomes and Inequality of Opportunities in a high-inequality country: The case of Chile," Working Papers wp292, University of Chile, Department of Economics.

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